RESPONDING EFFECTIVELY TO HEALTH CARE FRAUD INVESTIGATIONS
The U.S. Department of Justice's war against health care fraud continues to escalate. Vice President Gore recently announced that the Clinton Administration will propose legislation designed to increase the arsenal of weapons used by federal prosecutors and investigators to combat "waste, fraud and abuse" by providers. Specifically, this proposal would increase DOJ subpoena power in criminal and civil health care cases, provide greater power to stop kickback activities and create new civil monetary penalties and direct the U.S. Sentencing Commission to review and possibly stiffen the sentencing guidelines for health care fraud. In addition, a new top-level interagency task force has been established to develop strategies to collaborate and investigate criminal and civil health care fraud. The steady deployment of additional resources to prosecutors and investigators demonstrates that health care fraud will remain the Justice Department's top priority for years to come. As a result, aggressive, intrusive and time-consuming investigations will increase as law enforcement agencies seek to determine whether health care providers are engaged in fraudulent practices. Accordingly, providers must be prepared to respond effectively to criminal fraud investigations as part of their overall risk management plan. In developing your response to a government investigation of potential fraud, we urge you to consider the following:
Bring White Collar Defense Counsel on Team at Earliest Indication of Fraud Investigation
Unfortunately, even effective compliance programs cannot be expected to detect all possible fraudulent schemes. In certain cases the existence of an ongoing government investigation may be the first notice a corporation receives concerning a potential fraud problem. As soon as there is any indication that a government investigation is underway, an immediate risk assessment must be performed. There should be a preliminary diagnosis of the likely path and scope of the investigation. Experienced white-collar defense counsel and health care specialists should immediately team up with in- inhouse counsel. The team can thereafter provide advice to house corporate employees regarding:
- potential corporate search warrants;
- government sweep interviews; and
- grand jury subpoenas.
Because government investigations are often more aggressive in the area of health care fraud, providers must be prepared to respond effectively in the event of a surprise corporate raid, simultaneous sweep interviews of numerous employees, and grand jury subpoenas for corporate documents and employee testimony. Because of the immediacy of corporate search warrants, now a common tool in health care fraud investigations, it is wise for providers to have in place, before any indication of potential fraud, a corporate plan and strategy to manage effectively and respond to the devastating event of a search.
Immediately Begin Internal Corporate Investigation
The immediate corporate response to the discovery of possible fraud is critical both in terms of the corporation's defense and its appearance later to prosecutors who are evaluating conduct in making indictment decisions. The first step is to determine the facts and develop an effective and appropriate strategy. Significantly, a letter from outside counsel should be sent to the client establishing appropriate privileges that protect the confidentiality of the internal investigation. In addition, depending on the corporate culture and the matter involved, it may be appropriate to send a memorandum to affected employees advising them that:
- their cooperation in the internal investigation is needed;
- they should maintain the corporation's attorney-client privilege;
- they should preserve existing records and not create new records; and
- employees have certain rights in terms of responding to government inquiries at home and in the workplace.
Thereafter, a team of experienced health care and white-collar practitioners should begin the internal investigation. In collar appropriate cases, it can be very helpful to include as key members of the team attorneys from the in-house legal department. Their obvious knowledge of the business activity and rapport with employees can be invaluable in facilitating the investigative process. Employee interviews and any reports generated therefrom should be effectively protected by the attorney-client privilege and work product doctrine. Employees should not review or sign such interview reports and appropriate restrictive language must be included in all such reports to insure they remain protected.
As the investigation progresses, it will be important for the defense team to consider information-sharing strategies, via the joint defense privilege, with other entities or individuals under investigation. Other critical decisions that arise in the course of an internal investigation include decisions concerning the provision of defense counsel for individual employees based on potential conflicts of interest and the related attorney fees indemnification issues. Also, it is important to evaluate what, if any, SEC, government contract, ethical or other disclosure obligations may apply. Ultimately, sensitive employee disciplinary decisions will need to be made. A thorough investigation provides the corporation with a solid record upon which to make these decisions.
Effective Interface with Investigators and Prosecutors
In the event that the matter is referred to government investigators, it is vitally important that counsel for the corporation have credibility and rapport with the investigators and prosecutors assigned to the case. A courteous and responsive approach to law enforcement is not inconsistent with a vigorous, zealous and effective defense and assertion of applicable rights. In fact, such a relationship serves to increase the likelihood that prosecutors will be dissuaded from taking adverse action.
Disclosure and Defense Considerations
Critical strategic decisions must be made expeditiously based on an accurate assessment of potential liability. Should the corporation disclose and cooperate in an effort to obtain a satisfactory global disposition and attempt to avoid the collateral consequence of exclusion, or should it vigorously defend to avoid the disastrous consequences of a criminal prosecution? Are certain disclosures legally or ethically required? Only a thorough factual investigation by experienced white-collar counsel and health care practitioners, with expertise in the applicable statutory and regulatory law, can satisfactorily answer this question.
In sum, to protect against dangerous missteps in responding to government investigations, providers should have a plan in place, with key employees trained to implement it, to ensure that the corporation responds effectively and immediately. Appropriate training will help prevent "self-help" mistakes that can seriously compound problems and will allow a measure of control during the investigation. Contingency plans for corporate raids and employee sweep interviews are essential and must be ready for rapid implementation by trained employees. Such risk management is vital in light of the current investigative climate.